US debt deal: how Washington lost the plot, by Dean Baker: President Obama and the Republicans in Congress have finally worked out a deal over the debt ceiling. It appears as though the Republicans got most of what they wanted: big cuts to domestic spending and no tax increases.
On the plus side, social security and Medicaid appear to be largely intact, although the deal commits Congress to set up another one of those dreadful "bipartisan" commissions, and some cuts to Medicare are on the table. ...
What we should be worrying about is all the news that Washington has ignored while it was doing the debt ceiling shuffle. Most importantly, the economy has almost stopped growing and unemployment is again on the rise.
On Friday, the commerce department released data showing the economy grew just 1.3% in the second quarter. Even worse, it revised down the first quarter growth number from 1.9% to just 0.3%. ...
Of course, unemployment has been rising, with the June figure hitting 9.2%. That is up from a post-recession low of 8.8% in March. .... The employment to population ratio ... has fallen back almost to its low point for the downturn. The EPOP for African Americans has hit new lows in each of the last three months.
The revisions also provided other interesting pieces of information. For example, corporate profits were revised sharply higher for both 2009 and 2010. The share of profits in corporate sector output hit a new record high, more than a full percentage point above its previous peak. Finance was the biggest winner..., accounting for 31.7% of corporate profits, also a record high.
In short, we now have an economy that is stuck in the doldrums. It is operating well below its potential... And the Wall Street guys are fat and happy. ...
But in Washington, concerns about matters like growth and unemployment have no place. We just have to keep talking about the debt and the deficit.
The Republicans have the Club for Growth to promote the "limited government, low taxes, and economic freedom" favored by the business and wealthy interests it represents. This group has used the deficit as an excuse to implement its limited government, low tax agenda.
But who will stand up for workers? Certainly not Washington. The unemployed have been all but forgotten during the debt ceiling and deficit reduction debate. Thus, what we need is a Club for Employment to stand up for the interests of the working class.